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Foreign-invested companies’ satisfaction with Korea’s business environment increased while they became less satisfied with the country’s living environment.
Commissioned by the Korea Trade-Investment Promotion Agency (President: Oh Young-ho), Gallup Korea conducted a survey on foreign-invested companies’ grievances while doing business and living in Korea. According to the survey results, 47.5 percent of the surveyed executives and employees of foreign-invested companies expressed satisfaction with Korea’s business environment, a dramatic improvement from 18.3 percent four years ago. However, the satisfaction rate for Korea’s living environment slightly decreased from 69.7 percent to 67.4 percent due to increased traffic and housing problems.
Among the respondents, 52.5 percent said the country’s business environment has improved in general compared to the past, especially in areas such as business sites (53.5 percent), logistics (53 percent) and finance (42.5 percent).
The biggest reason that foreign-invested companies chose to invest in Korea was to enter the domestic market (40.5 percent), followed by market growth potential (24.5 percent), establishment of a global network (9.0 percent) and government incentives (4.5 percent), indicating that the Korean market’s size and its growth potential were important factors in deciding investment. Also, many foreign-invested companies responded that the Korean government is active and cooperative in attracting foreign investment, and that they offered diverse and practical incentives for foreign investors.
On the other hand, foreign-invested companies responded that grievances in the following areas need to be reduced: tax audits and lack of information on Korea’s tax system in the area of taxation; employees’ insufficient English skills, difficulty in dismissing workers and high wage in the area of labor; difficulty in securing professional workers in the area of R&D and innovation; low public awareness in the area of intellectual property rights protection; high rent in the area of business sites; and traffic congestion in the area of logistics.
In terms of the living environment, the respondents said that they were also experiencing obstacles such as language barriers, traffic regulations, high rent, expensive tuition fees, complex and difficult procedure for getting a cellphone and credit cards, communication difficulties with medical staffs and poor educational environment outside the Seoul Metropolitan area. In regard to the leisure and cultural environment and availability of foreign language, 59.8 percent responded that the improvement rate was 50 percent or higher compared to four years ago.
Foreign-invested companies’ concerns when investing in Korea included ease of business (30 percent), government regulations and transparency (13 percent), political stability (10.5 percent) and labor-management relations (6.5 percent).
“We need to make constant efforts to improve the business and living environment for foreign investors in Korea, and it is important to create an investment-friendly environment through investment attraction activities and frequent communications with foreign-invested companies.” said Han Ki-won, Commissioner of KOTRA’s Invest KOREA.
The survey was conducted randomly on the executives and employees of foreign-invested companies between June and October. A total of 200 respondents answered questions on the business environment, and 301 answered questions on living conditions. In addition, in-depth face-to-face interviews were carried out on 15 foreign-invested companies.
Source: Invest KOREA, KOTRA (2013.12.02)